Published on : 21 May 20203 min reading time

Before starting your project, you are exposed to many decisions depending on your objectives. The best thing is to always opt for a legal form that will adapt to the perspective of your company’s evolution. Be aware that your choice on this point will have an impact on the taxation of your entity.

For the choice of legal status of a company, there are two options available to you: there is the creation of a sole proprietorship (EI, EIRL), in case you think you are working on your own, being an auto-entrepreneur, and the creation of a company, in case you would probably be two or more people to be concerned, you would have the choice between several legal status. The criteria to be taken into account for the choice of the legal status depend on the reflection on elements related to your prospects such as the level of importance with the customers, the commitment of possible associates, the legal framework, the degree of responsibility of the manager. Setting up business is possible with bank4pro.

The choice of tax regime

There are only two possible choices in terms of taxation, so an individual will be subject to income tax or income tax with four possible variations such as simplified micro-fiscal, micro-fiscal, simplified real and normal real, while a legal entity will be subject to corporation tax or income tax with only one possible form. In taxation, the choice of scheme to be adopted has an impact on the keeping of accounts, the basis for calculating tax, the method of paying tax and the turnover threshold.

Legal status and taxation are inseparable: a sole proprietorship is subject to income tax, in this case the company is subject to transparent taxation. The profit of the company will be equal to the manager’s remuneration. You should declare the income either in the BIC category for an industrial, commercial or craft activity, or in the BNC category for a liberal activity. While a company will be taxed under corporate tax. In this case, taxation on profits is dissociated from the remuneration of the directors. The net income is taxed at a fixed rate and the salary of the executives depends on their remuneration and the dividends received.